Funds raised by China’s private property firms tumbled 66 per cent to 7-year low of US$33 billion in 2022, CRIC says

Some developers will be able to withstand debt pressure and repay their borrowings this year, but ‘many others will not do so’, consultancy says

While systemically important firms are finding financing opportunities more easily, ‘risky’ firms are raising less and less

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Residential buildings in Beijing. Photo: AFP

Published: 4:30pm, 20 Feb 2023Updated: 4:39pm, 20 Feb 2023

Fundraising by private Chinese property developers plummeted by 66 per cent to a seven-year low last year, according to mainland Chinese real estate consultancy CRIC.

The developers raised 227.1 billion yuan (US$33.08 billion) in 2022, a decline of 66 per cent from the previous year, the consultancy said in a report on Sunday. Fundraising at these developers has been in decline since 2020, when their financing rose 13 per cent year on year to a seven-year high of 1.24 trillion yuan before Beijing unleashed its “three red lines” policy in August 2020 and triggered a slide, CRIC said. Fundraising by developers plunged 45 per cent to 676.8 billion yuan the following year.

“In 2023, there will be a wave of debt repayments,” the consultancy said. “While some developers will be able to relieve this pressure through restructurings, many others will not do so.”

China’s property sector saw its heyday in 2016, when funds raised by developers rose by as much as 51 per cent to 854.7 billion yuan.

But last year saw some of the biggest drops in funds raised by private developers. In April, they raised 91 per cent less from a month earlier to secure only 5.4 billion yuan. In October, the figure dipped further to 1.3 billion yuan with a 92 per cent decrease.

The credit crisis – triggered by Beijing’s “three red lines” policy – has since 2020 ensnared big names such as China Evergrande Group and Sunac China Holdings. About 44 per cent of private developers are “risky businesses” based on their default records, CRIC said. These include Sunac, Shimao Group, Jinke Property and Tahoe Group.